Recently, the White House has deepened its tariffs on steel and aluminum. This action introduces several new product categories that promise to reshape entire sectors of industry all over the U.S. Today, the Commerce Department took an important step to change that. An extra 407 categories of products are newly affected by these taxes, such as auto parts, specialty chemicals, and fire extinguishers. This expansion increases both the extent of the existing tariffs and the potential adverse economic effect they would have.
At first, the tariffs were all about protecting American steel and aluminum. President Donald Trump’s trade agenda scored a major victory this week. This action counteracts harmful trade practices by targeting sectors to help rebuild domestic manufacturing capabilities and protect American jobs. The tariffs will further the administration’s U.S. trade agenda by increasing the cost of imported goods. Not only would this spur domestic manufacturing, it would boost American businesses.
The newly added categories of non-agricultural goods are likely to have immediate and negative impacts on a number of industries. Adding automobile parts to the tariff list would increase production costs for automobile manufacturers. As such, consumers may be forced to pay more. Specialty chemicals serve as key enabling inputs into a wide variety of manufacturing processes. Their proposed markup would deeply affect sectors dependent on these critical, fundamental resources.
One big point of contention has been that fire extinguishers have been added to the list of newly taxed items. Those increasing prices of devices designed to improve public safety could end up harming the public’s safety. Increased consumer prices would unfortunately have the opposite effect, disincentivizing both businesses and consumers from purchasing life saving fire safety equipment. This issue opens up an important discussion about the tradeoff between protecting U.S. industries and protecting the public health good.
As the department responsible for implementing and updating tariff policies, the Commerce Department will likely keep a close eye on how this expansion plays out. And our businesses are changing right along with them. Industry insiders and policy makers alike will be watching with great interest to see what the ripple effects are on supply chains and production costs.
As President Trump himself has repeatedly stated, tariffs are the key play in his trade playbook. Trump has claimed to want to decrease trade deficits and increase U.S. manufacturing with these types of actions. Critics note that such tariffs could invite retaliatory measures from our trading partners. This will hurt consumers in the end by increasing prices.